RECONCILIATION:

Early Thursday morning, the House passed their version of the “one Big Beautiful Bill”. It ultimately passed 215-214, although two Republican Congressional members simply missed the vote because they were out of the room or sleeping. You can find the full 1,118 page bill here. As can be expected, the bill is extremely wide-ranging, but many of the healthcare provisions don’t directly impact the SNF world. There are a whole slew of broad Medicaid changes, including work requirements for the expansion population and banning coverage for undocumented individuals, but as those are not the core SNF population, I’m not discussing them here.

With one notable exception, I’m also not addressing any of the tax provisions; like the cost segregation provisions (Section 111101), the SALT tax deductions (Section 112018), which will benefit individuals in high-tax states, or the School Choice Tax Credit (Section 110109).

Practically, the bill now moves to the Senate, which has its own priorities and timeline, but this is where we stand following passage of Reconciliation through the House.

Below is the breakdown, best I can tell, of the provisions that might have an impact on SNF’s. I’ve split them into three broad categories:

• Direct Impact (5 provisions):

• • Section 44132: Provider Tax Freeze – this freezes provider taxes where they currently stand, and states cannot increase the number. This mainly affects states that have a current budget ask based upon a provider tax increase. The language of the statute says that if a state “enacts or adopts” a Provider Tax increase before Reconciliation goes into effect, that increase would be grandfathered in.

• • Section 44122: Changes retroactive eligibility to one month from the date of application (as opposed to the current three months).

• • Section 44109: Changes the home equity limit for eligibility for long-term care services from $500,000 to $1,000,000 in some cases. I’m not entirely sure how this will play out in the real world, but this will likely impact eligibility.

• • Section 44121: Moratorium on the minimum staffing mandate. While the minimum staffing mandate is mostly dead legally, the bill explicitly puts a 10-year moratorium on its implementation.

• • Section 112205: This is a full section specifically governing the ERC tax credits, including new penalties, guides for how and when the credits can be applied on tax returns, and limiting claims to those filed before January 31^st, 2024. Please discuss with your tax advisors.

• Indirect Impact (2 provisions):

• • Section 44108: Increased eligibility redeterminations for the expansion population. This provision requires that states verify eligibility for the expansion population every six months. While it leaves unchanged eligibility redeterminations for non-expansion population, there is a chance that whenever the state puts in place the system to verify eligibility, they may choose to cover their entire Medicaid population, although they’re not statutorily required to do so. The deadline for implementation is October 1, 2027.

• • Section 44142: Cost Sharing. There’s a new $35 co-pay instituted for members of the expansion population. Don’t believe it affects SNF services but, again, there may be state-specific nuances that are instituted as a result.

• Halo Effect (1 provision; 1 general result of the bill). (Thanks to Jay Gormley of Zimmet Healthcare for the terminology). Essentially, as a result of these provisions, states will have fewer federal dollars flowing through their Medicaid systems, which will force them to make more decisions about who gets funding and where. Consequently, there will be less funding available, even for traditional Medicaid beneficiaries (like SNF residents):

• • Section 44111: Reduces FMAP expansion for states that provide healthcare to undocumented individuals. This pretty much targets 14 states that provides healthcare to individuals regardless of immigration status, but the language acts as 10% fine to states that are using their own money to pay for this service. California and Minnesota have already proposed steps to get in compliance with this language, but a 10% fine can be quite hefty and will force the rest of those states to make hard choices.

• • It’s important to realize that when all is said and done, even with the Medicaid cuts in the bill, it still is projected to add more than $2.3 trillion to the national debt (the full Congressional Budget Office estimates can be found here). If that happens, we’d enter a situation where sequestration cuts of 4% to Medicare could come into play. The official report is here (PDF). There are ways around this, and Congress has usually taken steps to avoid sequestration, but it’s important to be aware of.

WHITE HOUSE:

The White House focused this week on signing the Take It Down Act, a major priority of the First Lady, signing several Executive Orders related to Nuclear Energy, and getting the “One Big, Beautiful Bill” through the House (more below).

CONGRESS:

The Reconciliation discussion now shifts to the Senate, where a rewrite of significant portions is expected. As in the House, the battle boils down to the fiscal conservatives, led by Senator Ron Johnson (who want bigger spending cuts) and moderates (now including Senator Josh Hawley of Missouri!) that want to protect Medicaid cuts. Complicating matters for Senate Majority Leader John Thune is that the Senate has very specific rules about what is allowed to be included in Reconciliation, and it’s not clear just how many of the provisions in the House bill would pass muster. In terms of timing, the Senate would like to get a bill to the President by July 4^th. As we enter the weeklong Memorial Day recess, the Reconciliation battle continues. Elsewhere in the political world:

• • Speaker Mike Johnson is getting credit for shepherding the GOP through the exceedingly difficult process of getting Reconciliation done.

• • Even before the final version of Reconciliation passes, it’s already setting the stage for the 2026 Midterms elections.

• • A solid behind the scenes look at the role the President played in getting the final House holdouts on board in passing Reconciliation, including a very vocal defense of Medicaid. At the same time, those tactics may not play as well in the Senate where Senators have more political security.

• • This goes quite wonky, and on a topic completely unrelated to the SNF world, but it might offer some clues on what the Senate plans on doing with the parliamentarian and Reconciliation.

• • Included in the Reconciliation bill is a provision that would bar states from regulating AI for 10 years, something that is changing how states approach the issue.

• • The Chicago Tribune took a look at the major candidates to take over for Senator Dick Durbin upon his retirement next year.

AGENCIES:

CMS announced that they’re planning on beefing up audits of Medicare Advantage plans. Healthcare Dive has a good summary.

We mentioned the President’s Executive Order last week that sets goals to lower pricing for drugs and that figuring out the details would be key in the implementation. HHS took a first step in the process by setting pricing targets this week. Joining the fray was the US Customs and Border Protection (CBP) agency, which announced that CBP will go after pharma companies that don’t comply.

CMS issued new guidance (PDF) to hospitals on how to better comply with the hospital price transparency requirements from the President’s Executive Order earlier this year. They also issued a joint RFI with several other agencies on how to implement the drug price transparency components of the Executive Order. The RFI isn’t officially available yet, but a prepublication copy is available here (PDF).

The HHS at OIG released an audit that found CMS is not tracking whether states comply with federal requirements to return refunds that Medicaid Managed Care companies pay to states. You can access copies of the summary and the full report (both are links to the PDF).

FROM THE NOTEBOOK:

• • The Kaiser Family Foundation did a deep dive into the penalty that will hit states that fund healthcare for undocumented individuals that was included in the Reconciliation bill.

• • In addition to CMS blocking the state’s MCO provider tax last week, New York is likely to be particularly hard hit by Reconciliation’s Medicaid provisions.

• • A new study explored HUD’s 232 program and which SNF’s benefit the most from it. McKnight’s has a good summary.

• • Sellers Dorsey, a healthcare advisory firm, published their yearly summary of proposed state budgets for FY 2026. It’s a useful guide to understand the state fiscal landscape. Free registration is required to access the report.

• • Pennsylvania is using AI to speed up the process of filling vacant state positions.

• • Unexpectedly, Montana has become a leader in state-level regulation for the tech sector.